Worcester aims for owner-occupancy to restore housing stock

WORCESTER — The idea of targeting a struggling neighborhood and restoring it to its former glory — house by house, block by block — is ambitious, but city officials believe it can be done.

The City Council's Economic Development Committee got a first look Tuesday at the city's new housing strategy, which seeks to increase the number of owner-occupied homes in targeted neighborhoods that hold the highest concentration of distressed properties: the East Side, Piedmont, Main South, Green Island and Oak Hill.

The strategy is based on a report on the city's housing outlook compiled by RKG Associates. Full of sobering statistics, the report notes that 78 percent of the city's housing stock was developed before 1980; 52 percent of the city's housing stock was developed before 1940. A large portion of that stock is in need of repair or renovation, and about $120 million in capital will be necessary to get the below-average units back in shape, according to the RKG report.

Most of that older housing stock is in the form of the city's fabled three-deckers. Built to accommodate employees of the factories that dotted the city's skyline starting in the late 1800s, many of them have been allowed to slide. Part of the problem is that owners don't live there anymore; according to the report, about 44 percent of the city's housing supply is owner-occupied.

While the city's housing supply remains relatively affordable — the average sale price for a home in Worcester was $204,000 in 2010, according to the report — home ownership remains out of reach for many.

Part of that is simply income levels, according to the report, which says that 49 percent of all the city's households would actually qualify for affordable housing under federal income-based standards. But part of it is also how the housing market has changed since the real estate bubble burst. Renting often remains the affordable option for many families, Craig Seymour from RKG told the committee. But it has become more difficult for first-time home buyers to get into the market in light of tightened bank and mortgage requirements, Mr. Seymour added.

To respond to these challenges, the city's housing strategy proposes three lines of attack. "Reduce, Reuse, Recycle" will focus on eliminating blighted housing units, connecting home wners and tenants with quality available properties, and renovating vacant or underutilized properties. For example, down payment or rehabilitation assistance for vacant or foreclosed properties could provide incentive for increased home ownership, according to the city's strategy. Restructuring federally funded housing programs like HOME and Community Development Block Grants could provide assistance for new home owners.

Another area of focus will be connecting residents with the job market. Timothy J. McGourthy, the city's chief development officer, noted that some of the wealthiest communities in the area surround the city, but many of those residents work in Worcester. Part of the housing strategy is working with the private sector to look for ways to get employees who work in Worcester to live in Worcester.

The third pillar of the strategy is the immediate stabilization of neighborhoods. Included in that plan is giving city employees, particularly public safety employees, incentives to buy multifamily homes in the targeted neighborhoods.

City councilors were receptive to the strategy. District 3 Councilor George Russell called for even more aggressive action. Upon learning that $300,000 has been set aside in grant funds within the city budget for down payment assistance, he recommended it be doubled to accommodate anticipated demand. The city should do whatever it can to encourage home ownership, he said.

Mr. Russell cautioned that renovating and rehabilitating all these properties could have unintended consequences, and he called for a system to lock in tax rates on these properties for at least five years.

"We get people to invest in this older housing, then what do we do? Send them a higher tax bill," Mr. Russell said.

Most of the public comment came from local developers and property owners. Some such as Paul Collyer said it's important to include the input of people like him who have been investing in local neighborhoods for years. He said the equation is simple: If good housing were available in the core of the city, people will move there.

Other developers said there also needs to be a public safety component to the strategy. J. Stephen Teasdale, executive director of the Main South Community Development Corp., said he was glad to see the report delve into the "clarifying issue of the stigmatization of affordable housing." He said he has heard that the 49 percent of households that would qualify for affordable housing is more like 60 percent. He said the ability to have affordability in the city's housing stock is critical — housing that is affordable is not limited to those with Section 8 certificates.

Also at the meeting, the committee unanimously recommended adoption of a tax increment financing deal with the Worcester Business Development Corp. for the old Telegram & Gazette complex on Franklin Street, which is undergoing a "full-gut" renovation to accommodate a new extension of Quinsigamond Community College.

Pending full City Council approval, the 20-year TIF will give the WBDC $1.6 million in tax relief over the duration of the deal; the city will receive $4 million in property taxes during the same period. There is a minimum guarantee of 46 new jobs that will be given local preference in the agreement, and there is a commitment to keep the property on the tax rolls for at least 10 years after the 10-year lease with the college runs out.